Will Federal Regulators Step Up to Protect Consumers from SoLo Funds?

Payday predator seeks comeback in California, DC

Andy Spears


Photo by Chris Bayer on Unsplash

The payday predators over at SoLo Funds — home of the 4000% APR loan — are making a comeback in DC and California.

Jason Mikula at Fintech Business Weekly reports on the relatively mild penalties paid by SoLo in DC and California and then asks and important question: Will the Consumer Financal Protection Bureau (CFPB) step up and take action to protect consumers nationally?

SoLo Funds, recently named to CNBC’s Disruptor 50 list, has reached settlements with California and Washington, DC, for operating without necessary licenses, charging illegally high interest rates disguised as “tips” and “donations,” and engaging in deceptive practices.

The actions come a year after the company was hit with a cease and desist order in Connecticut and a citation from Minnesota’s regulator for operating as a collections agency without proper licensing and more than two years after the risks of SoLo Funds’ business model were first reported by Fintech Business Weekly, in February 2021.

Mikula notes that the assessed penalties, totaling $80,000 between DC and California, are essentially insignificant. Fines at that level do almost nothing to discourage the bad actions of a company like SoLo — which was found to be charging interest rates in excess of 500% APR and disguising the fees as “tips” or “donations.”

Mikula also suggests that while regulators in these two jurisdictions may now be more closely watching SoLo, the actions there do nothing to protect consumers in the rest of America.

While the California and DC actions illustrate SoLo’s problematic business model and history of deceptive practices, the orders do nothing to protect consumers — both the borrowers and lenders — in other jurisdictions. With now abundant evidence of the company’s issues, where is the CFPB?

This is a fair question.

Will the CFPB take any action against a known predatory lender that has run afoul of the law in multiple states?



Andy Spears

Writer and policy advocate living in Nashville, TN —Public Policy Ph.D. — writes on education policy, consumer affairs, and more . . .